Friday Offcuts  28 April 2017

The lead news this week in wood products of course is the move by the US President Donald Trump to step into the ongoing softwood debate between the US and their neighbour, Canada. He wasn’t pulling any punches either calling Canada’s actions against American trade interests “a disgrace” – in fact, a trading disaster. Commerce Secretary Wilbur Ross on Monday announced new tariffs averaging 20 percent on imports of Canadian softwood lumber. Looking into the fine print, levies range from 3 to 24 percent on softwood lumber from five Canadian companies with all other Canadian softwood lumber producers and exporters expected to pay a rate of 19.88 percent. The preliminary duty schedule set out is still pretty confusing. It’s reported that countervailing duties on Canadian imports are retroactive to 25 January and a separate decision by the Department of Commerce on antidumping duties is scheduled for 23 June.

The fallout understandably is going to be considerable. You just have to monitor the rhetoric coming out of North America over the last few days. The US currently imports about $5.66 billion worth of softwood lumber (more than a third of the American market) from Canada every year. As pointed out this week, US home buyers (the people who voted Trump into office) and those working in the home construction industry are going to be hit hard. The US National Association of Home Builders says that US home buyers are going to have to pick up the resulting 6.4% increase in the cost of wood. Longer term, in global wood markets, the balance of trade may shift further as Canada pushes its products to alternate markets. Make no bones about it, it’s been a bad week for U.S.-Canada trade relations. You can check out the video below. We also cover this story with several links to some of the articles and reaction over the week to the announcement.

To mark Worker Memorial Day today, New Zealand’s Forest Industry Safety Council in a media release yesterday announced plans for a new national contractor certification scheme that will be formerly launched to the forestry industry in May and June. The scheme will offer forest owners and managers a formal assurance that the contracting companies they’re hiring are competent to do the job. For forest workers, it will drive improvements in health and safety, and employment conditions. It’s already been piloted to ensure that it's going to work for both small and larger operators and it’s going to include field audits to ensure safety procedures are being followed on site. A link for further details on the planned scheme can be found in the story below.

In harvesting, last week, the second international steep slope logging event was run in North America – the second in the last two years run by Innovatek and partners. This time it was in Kelso, WA with a large contingent of logging contractors and forestry companies from throughout the Western US learning from kiwi innovators and local loggers on winch assist and tethered machines and operating practices being used for steep slope harvesting. The HarvestTECH 2017 event for this region follows on 20-21 June 2017 in Rotorua, New Zealand.

And finally, to get you thinking at the end of the week. Rob de Fégely, National President of the Australian Institute of Foresters presented a grim picture of Australia’s contribution to managing renewable forest and plantation resources to the 19th Commonwealth Forestry Conference in India this month. We’ve included the release along with his comments below. Enjoy this week’s read.

Trump's tariff on Canadian Softwood Lumber slammed

The Trump administration has fired the first broadside in its battle against bilateral trade imbalances. And its aim was not what most people expected. Canada, not China, is the target of the Trump trade team’s wrath.

Commerce Secretary Wilbur Ross has just announced a new 20% tariff on imports of Canadian softwood lumber. The US currently imports about $5.66 billion worth of softwood lumber from Canada every year. It is an essential input for the American construction and home repair industries.

This move is ostensibly in response to a petition from American lumber producers, who have long complained that Canada’s system of “stumpage” (charges for logging on Canada’s government-owned lands) amounts to an unfair subsidy.

The US has never managed to prove that Canada’s pricing is unfair: it has lost legal challenges at the World Trade Organisation and under NAFTA. But American lumber producers continue to complain, and American governments continue to launch futile legal action against Canada in response to their complaints. Viewed in this light, this move simply looks like yet another attempt to pacify American lumber producers.

But anyone who was paying attention to Trump’s pronouncements even before he was elected would have seen this coming. Canada was the first of six countries listed by Peter Navarro and Wilbur Ross as the primary “cause” of the USA’s trade deficit.

Consider that roughly half of our trade deficit is with just six countries: Canada, China, Germany, Japan, Mexico and South Korea. If we look at the bilateral relationships of America with each of these countries, improvement in our trade balance is clearly achievable through some combination of increased exports and reduced imports, albeit after some tough, smart negotiations – an obvious Trump strength.

The paper from which this quotation comes was issued in September 2016. It is the blueprint for President Trump’s trade policy. It was therefore always inevitable that Canada would be targeted for protectionist measures. And given the long-running dispute between Canada and the USA over softwood lumber pricing, the lumber industry was bound to be first in line. It will not be the last.

Canada’s response to Secretary Ross’s announcement was prompt and robust:

- The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty. The accusations are baseless and unfounded…..

- The Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation. In ruling after ruling since 1983, international tribunals have disproved the unfounded subsidy and injury allegations from the U.S. industry. We have prevailed in the past and we will do so again.

- Battle is joined. Though given the US’s stated intention to renegotiate NAFTA, and its threat to bypass WTO dispute resolution, it is difficult to see which international tribunals could now arbitrate. Canada could end up having to tolerate a level of tariff that it considers unfair, because the alternative is a highly damaging trade war. Sometimes it is better to put up with bullying. Read more.

Sawmilling tech series ready for September 2017

Two years ago – over two weeks - FIEA’s WoodTECH conference series achieved a record turnout of sawmilling companies drawn from throughout Australia and New Zealand. Over 350 delegates from all major sawmilling companies in the region in addition to leading technology providers from throughout Australasia, North America and Europe converged on Melbourne, Australia and Rotorua, New Zealand.

Two years later, in September 2017, WoodTECH 2017 will again be attracting scanning and sawing technology specialists, innovators and leading practitioners from around the world. The two-day programmes will provide;

1. New Technology Updates.

A focused and independent platform will showcase the very latest in wood scanning, sawmilling, and mill optimisation technologies from around the globe. This will be achieved through a series of tailored presentations and on-site exhibitions.

For the first time in Australia and New Zealand, a series of practical workshops have been set up for local mills. They’re aimed at sawmill production and operational staff. They’ll provide a unique insight into how sawmills can extract the best performance out of their saws, their machine centers and sawing operations. Workshops of between 60-120 minutes are being given on;

The objective this year is to encourage sawmill teams – management, mill production, saw-doctors and maintenance staff – to take advantage of the line-up of international specialists being brought into the region to work alongside local mills. This will ensure that teams can collectively put the practical learnings into practice once back on site.

Workers Memorial Day with major Forestry Safety Initiative

The NZ forestry industry is marking Worker Memorial Day (April 28th) by confirming it will launch a major initiative to keep forestry workers safe. The Safetree Contractor Certification scheme has the potential to transform health and safety in forestry, says Fiona Ewing – National Safety Director of the Forest Industry Safety Council (FISC). The scheme will be formally launched to the industry in May and June.

“Certification will lead to improved health and safety, and employment conditions for workers,” Fiona says. It is fitting that the scheme’s launch should be announced on Workers Memorial Day, she says. “Four forestry workers were killed on the job in 2016 and another two were killed in the first four months of 2017.”

“That’s less than the 10 deaths recorded in 2013. But clearly there’s still a lot of work to do to achieve our goal of zero serious injuries and deaths in forestry. Contractor certification will help us achieve that goal, so it’s important that the industry supports this scheme.”

Certification will ensure contracting companies have the skills and support they need to operate safely, and will give them a clear standard to operate to, Fiona says. “It will make things fairer, by ensuring good contractors aren’t under-cut by contractors who cut corners on health and safety. It also gives forest owners assurance that the companies they’re hiring can do the job properly.”

The scheme goes beyond ‘paperwork’ and includes field audits where assessors go on site to observe and talk to workers about their safety practices, Fiona says. The initiative was developed by FISC over the last year with substantial input from the forestry industry and in consultation with WorkSafe. It was piloted by small and large operators, to ensure it could work for everyone in the industry.

Certified companies will be added to an online register that can be searched by forest owners looking for contractors. Forestry contractors will be encouraged to sign up to the scheme during a national roadshow later this year. More information about the initiative is available on the www.safetree.nz website.

Early presenter interest for ForestTECH 2017

The ForestTECH series has been run annually by FIEA since 2007. It is now firmly established as the technology event where forest resource managers, remote sensing and GIS specialists and inventory foresters from throughout Australia and New Zealand meet.

ForestTECH has become the annual platform for showcasing; new remote sensing technologies, advances in satellite imagery, mobile communications developments, systems for improving data collection, analysis and reporting, disseminating results from research and in-forest trials and the integration of this into operational, strategic and financial planning.

ForestTECH 2017 is being run this year in Rotorua, New Zealand on 15-16 November and again in Melbourne, Australia on 21-22 November. Input from forestry companies and feedback from last year’s event suggests that this year the focus for this year’s series will be on “unlocking the true value of data” and will include;

- Storage, processing and management of "big data"
- Analysing and using harvester data for inventory management
- The practical application of automation, robotics and sensors by forest managers
- Integrating virtual and augmented reality into forestry operations
- Results and lessons from reconciling remote sensing data in the field
- New innovations in mobile forest apps and collection tools
- Mobile communications advances in more remote locations
- Workflow solutions for data collected from airborne and UAV systems
- New mapping and GIS applications

Expressions of interest from forestry companies, key suppliers and researchers are now being sought to be involved as presenters at this year’s ForestTECH 2017 series.

NZ log volumes hurt by recent stormy weather

New Zealand log supply will likely be curbed by recent stormy weather, as cyclones dented local production and disrupted sea freight.

"Rain and wind from the ex-Cyclones Debbie and Cook lashed the central and lower North Island in the past fortnight, slowing production rates and causing damage to trees," AgriHQ analyst Reece Brick said in his monthly forestry market report. "This should slow offerings to the market, but will obviously only benefit those not impacted by the weather."

AgriHQ's Brick noted that the East Coast and Hawke's Bay were significantly impacted, areas which account for about 17 percent of the country's pine plantations. The stormy weather conditions also caused havoc to sea conditions, forcing at least one ship to cancel its booked shipments to and from New Zealand, and delaying many other shipments, Brick said.

"Ultimately, this will curb April export volumes," Brick said. Brick's monthly survey of exporters, forest owners and saw millers showed prices were little changed this month. Domestically, structural log prices for S1 logs remained at $122 a tonne, while roundwood log prices held at $92 a tonne. Pruned logs were more varied, with the P1 price lifting $2 a tonne to $179 a tonne while lesser quality types were stable or weaker.

In the export market, all measured grades were either stable or marginally firmer, with A-grade logs fetching $126 a tonne and export pruned logs at $165 a tonne. AgriHQ noted that shipping rates to China had lifted and shipping capacity was more difficult to secure than earlier in the year.

"Commodity trading between Australia and eastern Asia, particularly in iron ore and grain, is keeping capacity active in the Pacific," Brick said. "Weather conditions in the wake of Cyclones Debbie and Cook are also limiting sea freight options.

"There is an increasing belief that once commodity exports out of Australia settle, shipping rates will begin to weaken again."

Latest Timber Market Survey report released

The December quarter Timber Market Survey (TMS) has shown downward price movements for untreated MGP10 grade products ranging between 0.1% and 1.6%, while untreated MGP12 and treated F7 product prices remained more stable.

Prices for engineered wood products have continued to trend upwards, with December quarter 2016 nominal prices around 4% - 5% higher than in the previous 12 months. Panel products showed moderate upward price movements between 0.1% and 0.5%.

Structural hardwood products recorded upward price movements over the six months to the December quarter 2016, ranging between 1.3% and 2.3%; the exception being F27 prices, which remained relatively stable. Most hardwood flooring products also experienced positive price movements, ranging between 0.8% and 2.2%, while standard grade Victorian ash and Tasmanian oak products showed marginal price movements within +/-0.3%.

The TMS collects price data through quarterly surveys of a representative sample of timber market participants in eastern Australia. All quarterly TMS reports contain price movement information for softwood timber, panel and engineered wood products. The June and December quarter editions also include price movement information for hardwood timber products surveyed over a six-month period.

The TMS is prepared by Indufor and funded by seven major Australian forestry organisations: Forestry Corporation of NSW; VicForests; Hancock Victorian Plantations; HQPlantations; OneFortyOne Plantations; Queensland Government Department of Agriculture and Fisheries; and Green Triangle Forest Products.

More native forest to manage emissions obligations

Companies with high greenhouse gas emissions face the risk of high costs in a carbon market where prices could soar as high as US$190 per unit. Researchers at Motu Economic and Public Policy Research have released a report showing an environmentally and economically attractive way to decrease the risk for those high emitting companies by establishing more native forest.

The report, commissioned by Air New Zealand, explores some of the barriers and potential to get more native forestry offsets created in New Zealand.

“Eight percent of the forest land registered in the ETS is native,” said Dr Suzi Kerr, Senior Fellow at Motu and co-author of the report. “Since 2008, however, only 500 Ha of new native forest has been established and registered. If we established another 10,000 Ha of land in native forest, this would sequester 65,000 tonnes of greenhouse gases annually, which would be eligible to earn 65,000 NZUs per year under the ETS.”

Firms with obligations in the Emissions Trading Scheme (ETS), or with high emissions that they cannot rapidly reduce, all need to plan ahead in case the unit price goes substantially higher than its current $17 per NZU.

“Recently the International Energy Agency predicted that the international carbon unit price could go as high as US$190. If that happens, the more native forest we have established, the more we will celebrate” said Dr Kerr.

“We don’t want all of NZ back in native forest but on large areas of marginal pasture land there really is no way New Zealand can lose,” said Dr Kerr.

National shame with AU$2b trade deficit in wood products

Australia is the seventh most forested country in the world and Australians have more forest per person than most other countries except for the Canadians and the Russians. Rob de Fégely, National President of the Australian Institute of Foresters presented a grim picture of Australia’s contribution to managing renewable forest and plantation resources to the 19th Commonwealth Forestry Conference in India this month.

Rob said, ‘It is a source of some national shame that Australia has a significant trade deficit in forest products of more than AU$2 billion each year. This is not an economic argument but a moral and social one. We have the space, skills, wealth and knowledge to do more’.

‘Using wood is good – it is a carbon-positive, renewable resource - and it is almost impossible to live a day without using wood products in some form. Wood is a timeless product and we should encourage its use’.

‘Most of Australia’s 125 million hectares of forest are either privately owned or on leasehold land yet the bulk of the production from natural forests come from public multiple use forests. In addition, most of our planted forest estate was either established by public forest agencies or with some form of government assistance’.

‘Private forest owners and Indigenous Australians, particularly in natural forests are conspicuous by their absence in the long-term supply of wood products. We can change this if we have the community support and political will to do so!

‘Indigenous Australians own, manage or have an interest in around 30 per cent of Australia’s forests and many are wanting greater autonomy in the management of their land and forests. Effectively managing forests for environmental outcomes is also not the pretty picture we are often led to believe. Australia has considerable areas of conservation forests which have no effective monitoring making it challenging to make informed decisions about forest management particularly in a landscape context. Are these forests achieving what we think they are?’

‘We need to investigate whether there is market failure in the domestic forest products market and whether incentives are needed to continue to develop new forest resources. Although I am often reminded that one of the best incentives is a simple one called profit!’

‘Australia has a proud history of forest management and has the ability to improve conservation outcomes from its forests while meeting demand for renewable resources like wood,’ said Rob.

Solving the Canadian softwood lumber dispute?

“Every day, tensions are rising between the United States and our sworn enemy, Canada.” That’s how Stephen Colbert began a monologue about Canada’s brewing trade conflict with the United States, which escalated with the announcement of a 20 per cent tariff on imports of Canadian softwood lumber...Colbert had an idea for how the two countries could ease tensions...

Chalk up another climate milestone

Atmospheric carbon dioxide concentrations hit 410 parts-per-million last week, the highest they’ve been in more than 15 million years. The last time there was this much carbon dioxide in the atmosphere, global temperatures were 3deg to 6deg warmer and New Zealand was a very different place; inland Otago was dominated by a lake full of crocodiles and covered in Eucaplytus and other Australian forests.

The 410ppm record was taken at the Mauna Loa Observatory in Hawaii on Tuesday last week. The Southern Hemisphere isn’t far behind. A reading at Baring Head in Wellington last Thursday was 401ppm, and National Institute of Water and Atmospheric Research scientists expect it to climb over winter. Bearing Head is the longest-running record in the Southern Hemisphere. When scientists started taking records there in 1972, carbon dioxide concentrations were around 325ppm.

It’s now a year since New Zealand and other countries signed the Paris Agreement on climate change, promising to hold global warming to no more than 2deg, and hopefully to 1.5deg. At the current rate of global greenhouse gas emissions, the carbon budget to achieve the 1.5deg goal will be burned up in five years, with the 2deg milestone about 10 years behind.

Contract for real-time satellite communications platform

Coillte, Ireland’s national forestry company, has announced a major €1 million contract agreement, with Cork-headquartered Treemetrics to roll out a pioneering real-time satellite communications and data-analytics platform for forestry harvest control. An Taoiseach Enda Kenny T.D was joined by Coillte Chief Executive Fergal Leamy and Treemetrics CEO and co-founder Enda Keane in Government Buildings to mark the agreement (photo).

The Treemetrics technology platform, a world first for the forestry industry, is designed to optimise operational efficiency, reduce waste and improve environmental sustainability. Treemetrics developed the ground-breaking communications technology working in partnership with the European Space Agency (ESA) over the past four years.

The satellite communications platform communicates directly with harvest cutting machines ensuring that they always have 24/7 connectivity, thus delivering positioning and mapping services to the driver-operators as well as sharing data about the tree-logs in real time with the forest managers and sawmill wood buyers.

Marking the announcement An Taoiseach, Enda Kenny, T.D said: “After a chance meeting on a Dublin Street some years ago, I have followed with interest the Treemetrics story of success. Now, as then, I am happy to support them as their visions mature into pioneering solutions for the forestry sector”.

The Treemetrics technology platform aims to improve management of forestry resources by real time monitoring of the harvesting process, providing tree quality mapping and a reduction in travel costs to and from forest sites through In-Vehicle-Navigation and improved Inventory mapping.

Fergal Leamy, Chief Executive, Coillte said “Coillte is on a path to becoming the best forestry and land solutions company in Europe. Our increasing use of technology will be crucial over the next few years as we aim to create the connected forest. I am delighted to be working with world leading technology companies like Treemetrics, who also happen to be based in Ireland, as we develop innovative solutions to how we manage our forests”.

Enda Keane, CEO and Co-Founder, Treemetrics, said “Treemetrics are very grateful for the support we received from the European Space Agency, our technology partner and to Coillte our valued Irish customer, to enable us to deliver the ‘Internet of Trees’ platform, providing real time data analytics and transformative insights, that will deliver great benefits to the Irish forestry industry, in terms of environmental sustainability, management optimization and improved profitability.”

FWPA industry research funding available

If you have a collaborative research project that needs funding, Forest & Wood Products Australia (FWPA) and the Australian Government may be able to help. Matched Federal Government funding opportunities are available for industry research projects under a program that FWPA initiated.

Industry researchers are invited to apply for a share of AU$1.3 million voluntary matched Federal Government funding available for the 2017-18 financial year. Limited finds are also available for projects up to AU$100,000 for research projects commencing in 2016/17.

The Managing Director of FWPA, Ric Sinclair, said research was a vital element in growing a thriving and sustainable industry – and commended the Federal Government for its investment.
“We know there are people in the industry with some innovative and valuable ideas, and are pleased to offer them the opportunity to access Federal Government funding that will help further their projects, growing jobs and profitability into the future,” he said.

“Relatively modest investments can yield huge rewards, and research projects already co-funded include acoustic testing of cross-laminated timbers; an exploration of using harvest waste for medicines; and tools to improve plant breeding – to give a few examples.”

The invitation is open to researchers proposing collaborative projects, with matched funding from the Federal Government being offered on a dollar-for-dollar basis. To be eligible, research projects must:

- Have voluntary cash contributions from at least two unrelated companies, where the money contributed has not originated from Federal or State Government funding;
- Align with industry and government research priorities;
- Make intellectual property created available to the industry at the project’s completion (NB there is no requirement to make availability free of charge); and
- Not constitute cost-shifting i.e. the research project must be additional activity, rather than research an organisation would have been conducting in any event.

To find out more about how to apply for research funding, contact FWPA R&D Manager Chris Lafferty on 0422 373 399.

Oji suspends tender for NZ mills until June

Oji Fibre Solutions, which bought Carter Holt Harvey’s pulp, paper and packaging businesses in 2014, will put off a tender for wood processing services at its Kinleith and Kawerau mills until a full court hearing in June after current operator Pedersen Group sought an injunction to stop the process.

Rotorua-based Pedersen made the application for an injunction against Oji and adviser Partners in Performance International (NZ) last week over concerns the process will interfere with its contracts that run through to 2024, chief executive Gavin Hudson said in a statement.

"We think Oji Fibre Solutions can be a great part of New Zealand's fibre future," Hudson said. "We've got lots of ideas and have invested millions of dollars in specialised equipment to help them achieve that. But it needs to be done on the basis of mutual respect."

Pedersen operates the Kinleith and Kawerau mills in New Zealand, Norske Skog's pulp mill in New South Wales, the Maryvale paper mill in Melbourne and the Vanua Levu chip plant in Fiji. It's owned by private equity firm Maui Capital.

US company shipping containerized logs to Asia

Other companies have done it. US based Forest Marketing Enterprises even has dabbled in it since 2002. But the Everett-based timber company made it a big part of its business model last year and is now getting recognized for the effort.

Forest Marketing, better known as Formark, started exporting millions of board feet of logs to Asia in shipping containers. Usually, logs get transported overseas in bulk ships. Formark is packing logs into containers and putting them on container ships.

Shipping containers come from Asia filled with goods and then are typically shipped back empty. By filling these containers with logs, Formark is able to make smaller shipments of logs, which are more appealing to smaller mills in Asia. It’s also increasing the revenue of freight companies and ports while decreasing port congestion.

That’s why Warren has been chosen as the Small Business Administration Exporter of the Year for the Pacific Northwest including Alaska, Idaho, Oregon and Washington. He is one of 10 finalists for the Small Business Administration National Exporter of the Year. The winner will be announced in May.

The company exports logs to Asia including to China, Japan, South Korea and Pakistan from tree farms and private property owners. Timber harvested on public lands can only be sold to domestic lumber mills. Formark shipped 16 million feet of logs in containers to Asia in the fourth quarter of 2016. One million feet of logs is about 230 truck loads. Read more

Talks stall on future of Australian Sustainable Hardwoods

Moves to convince the owners of the Heyfield timber mill to sell the operation to the state government have stalled, despite Premier Daniel Andrews announcing the drastic move more than a month ago. It is believed the government has met the owners once since the announcement, but no further attempts have been made to resolve the issue.

When Australian Sustainable Hardwoods last month announced it would close the mill, Mr Andrews said he would save workers’ jobs. He didn’t rule out the government buying the mill, but denied it would cost taxpayers more than AU$50 million.

“There has been no formal offer and no formal discussion about a sale,” ASH spokesman James Lantry said.

....and one to end the week on .... toilet facilities

A city couple decide on a tree change and eventually find a lovely place in the country to buy.

During the inspection, the elderly owner shows them around what is a beautifully maintained and tastefully decorated period home. The husband is very excited but his wife looks a bit uncertain.

“I love it but there doesn’t seem to be any toilet facilities,“ she says.

“Well we’re not on the mains and the ground’s too hard for a septic so we’ve got a traditional Aussie dunny can down the back,” the owner explains.

He takes them down through exquisite gardens to the dunny surrounded by freshly blooming lilacs. It is solidly constructed, weather tight, freshly painted, its inside surfaces sparkling and the toilet seat made of solid 100-year-old highly polished and fragrant camphor wood. The wife still looks uncertain.

“It’s very beautiful but there doesn't seem to be any lock on the door,” she says.

The owner is a bit taken back.

“Yeah, there’s no lock but I don’t know what people are like where you come from but I’ve lived here for 70 years and I’ve never had a bucket of $#&% stolen yet.”

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